COVID-19

Quality of Earnings solution for lending during COVID-19

Patrick Dillon Patrick Dillon

You have come to rely on us for our quality of earnings assessments in your investing decisions on buy-side and sell-side transactions. During this volatile economic environment brought on by the COVID-19 pandemic, you can continue to rely on us as we are here to respond and restore together. We have developed a tailored quality of earnings solution that you can incorporate into your financing decision for a business looking to obtain short-term financing.

Immediate actions to take

Evaluate quality of earnings - today and tomorrow

In a slowing economy, it is imperative for stakeholders to understand the quality of earnings of their investments, both today and into the forecast period. We can critically evaluate the quality earnings for a business over both a historical and projected period, while obtaining an understanding of a company's plans to bridge from the past into the future in the face of current economic events. From performing a critical review of revenue and expense drivers to understanding potential supply chain disruptions and manufacturing or production capacity limitations, we can evaluate management's plans for moving forward.

Additionally, in our analysis we will:

  • Assess working capital key performance indicators (such as days sales outstanding, days payables outstanding, and the resulting cash conversion cycle) and understand management's efforts to optimise its working capital
  • Evaluate capital expenditure requirements and where non-essential spending can be deferred, if possible
  • Assess and evaluate management's cash flow forecast to understand the company's ability to meet immediate obligations, considering scenarios like known (or potential) receivable collections risk and vendor disruptions

At the ready to help you

Grant Thornton's Corporate Finance specialists have a proven history assisting lenders, private equity, and corporate clients in successfully executing M&A transactions. Our integrated team of experts work together efficiently to provide the tailored solutions you need.

In addition to extensive due diligence experience, we have a track record of serving underperforming and transitional companies and their stakeholders as well as delivering working capital maximisation strategies and financial and cash flow forecast of your investment holdings.

Our multi-faceted solutions provide enhanced value to companies and stakeholders facing business challenges during this time of uncertainty.

Our approach is to provide pragmatic guidance to help companies in the ways that matter most.

You can count on us to:

  • Bring a calm and deliberate approach to key considerations
  • Help you filter out the noise, fully understand your options and create actionable plans forward
  • Respond at the speed of your need
  • Provide mutually agreeable scope of work and fee estimate, regularly communicating progress to date. Our commitment: No surprises.

Capabilities

  • Deep specialisation and understanding of drivers of company quality of earnings
  • Understanding of key company revenue and expense drivers
  • Covenant compliance review
  • Execution of M&A in accelerated/distressed environment
  • Working capital optimisation strategies
  • Business viability assessment
  • Business forecast preparation and assessment
  • Cash flow management through revenue and cost optimisation
  • 13-week cash flow assessment
  • Analysis and stress testing of model assumptions
  • 3-statement financial modeling
  • Tax attribute evaluation